Social Security Bridge Strategy

I examine a retirement income strategy in which retirees delay claiming social security benefits and use 401(k) assets as a bridge between retirement and receiving social security income. I find that higher inflation, lower asset returns, higher longevity, desire for longevity insurance, and lack of bequest motive make the “bridge” strategy more attractive. In addition, using Monte Carlo simulations I show that the variation of retirement income is lower under the bridge strategy. I have created an excel model that allows future retirees to plug in values and shows them comparisons of their assets and income with both strategies.